Читать книгу Fundamentals of Financial Instruments - Sunil K. Parameswaran - Страница 21

The current account balance refers to the total of the following accounts:

 Exports of goods, services, and income

 Imports of goods, services, and income

 Net unilateral transfers

Services include tourism, transportation, engineering, and business services. Fees from patents and copyrights are also recognized under this category. Income includes revenue from financial assets, such as dividends from shares and interest from debt securities. Unilateral transfers are one-way transfers of assets, such as worker remittances from foreign countries and direct foreign aid.

The net foreign assets of a country may be defined as its foreign assets minus its foreign liabilities. If the net foreign assets are positive, then the nation may be deemed to be a creditor nation; otherwise, it is a debtor nation. The change in the current account is equal to the change in net foreign assets.

If a country has a current account surplus, either its foreign assets will increase or its foreign liabilities will decline. On the contrary, if a country has a current account deficit, either its foreign assets will decline or its foreign liabilities will increase.

Opinion: Finance can be made incredibly complicated in the form of exotic securities and sophisticated mathematical models. But the core issue in an economy is that some entities have more than what they want, whereas others want more than what they have. The former transfer their surplus wealth to the latter, which issues securities in return. The securities themselves, and the businesses that deploy the resources, are vulnerable to different types of risks. Consequently, risk mitigation instruments, such as financial derivatives – which, incidentally, can also be used to speculate on risk – come into existence. But if we sift through the theories and the formulas, the underlying core transaction is a transfer from a Surplus Budget Unit (SBU) to a Deficit Budget Unit (DBU).